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Welcome to a bonus episode of Merin Talks Money, the podcast in which people who know the markets explain the markets. I am mere in Sunset Web. I am just back from a long trip home from Japan with me today, of course, is author of the award winning Money Distilled newsletter, John step Back Hi John, Hi, Mel John. I've been away for literally a couple of days, and everything seems to have gone completely nuts while I've been away.
A bitcoin you should never never leave the country. It's usually just go to ports without you.
It's usually when you go away that the market crishes one way or another. We've had this joke before you go on holiday to Portugal, come back, everything fall and twenty percent. But this time bitcoin really really has come off a lot. So it's down quite a lot in the last couple of days. It's down to twenty five percent year to date, forty percent of six months, and close to fifty percent off the high it hit last
year one hundred and twenty five thousand dollars. We went down to sixty thousand dollars at some point, and I think as we speak it's bounced quite a lot back up to the mid sixties. But this is not what people expected. And I think one thing we can say for absolutely sure at this point that bitcoin is not quite the same thing as gold. Am I ride around my absolutely right?
Oh, I think that's fear. That's definitely fear.
Yeah.
Well, it's what's interesting is Bitcoin doesn't seem to have participated and they can a slightly manic run up that someone gold had, but it does seem to be participating in the very mini rundown that they've been harving. So I'm curious sis to why that is so.
Am I? And it seems really that it's not so much that is moving around the place with gold, but it's moving around the place with software, because it kind of is software anyway. As you and I know nothing about these things and are inbstantly permanently wrong on bitcoin, we've actually invited someone on who does know something about bitcoin and how it all works. We've got on Charlie Morris's on the line to try and help us make
sense of all this. He is the founder and chairman of investment research from bite Tree, and he has been on with us a couple of times before, so regular sins will note him. Well, Charlie, welcome to Marrin Talks Money. Thanks for the imitation, Right, Charlie, what's going on?
Do you want to talk about bitcoin? I mean, yes, I do the best performing essay in the history of the world. Let's start the Yes. You know, it comes to market at a very low market gap that's been I think it was around one hundred and fifty thousand dollars gap in twenty ten when it started trading about six cents. We can on ways since then, and we
have these things called cycles. It goes a lot, then he goes down a lot, and we've just in the last twenty four hours or in baut the last a few days, experienced one of the down and loss.
Okay, so why does it go down a lot? I mean we're talking a lot. And there'll be a lot of people out there who caught this wave up, having missed previous waves up. They'll have ridden it up to one hundred and twenty one hundred and twenty five. Some people will have bought it up there. I mean, it goes not alone here. People have done this with gold and silver as well. So given that it's not moving
with gold and silver. It's not the same asset. And this is one of the things we've talked about with you a lot, that it is a very different type of asset. What is it that is driving this collapse?
So they're likely things. I mean, I've always said that, you know, gold's a sort of a macro assets and it's a real world asset, and bitcoin it's a digital world asset. I've always had high correlation with tech. I used to highlight that with social media stocks, because if you think about it, you're sharing pictures of cats and funny jokes on the Internet and social media. It's got
that similar to exchanging value. I mean, after all, its Internet activity, and Bitcoin's always loved the idea of more activity and the more people in the network for engaging in this space at the higher the price would go. And I guess the Internet's kind of topped out, you know, last October. I think there's a pretty strong view that, actually I said it at the Money Week conference in October that the bitcoin at the nastack had beat and
it does look increasingly like that. And bitcoin really is the sort of next Nastak on steroids, a bit like what silver is to gold. So I think that's a very simple explanation of where we are. And let's strong there. There's so many ways we can go here.
Which way do you want to go?
Well for your cycle content? You know?
Regulation, I think quantum's actually interesting because that cost to me there because this thing where people are worried about the rise of quantum computing and the quantum computing might somehow destroy or render worthless the cryptography that protects bitcoin and other cryptocurncies. I mean, how I kid it is that because I've had different things about quantum and whether that's actually correct or not.
Yeah, well it looks flirstly disclosed. I'm not a computer science expert, but I do try to follow these things. And the thing about quantum is you've got very very powerful computing and I guess that the threat is that if you could guess private keys at are sufficiently high rate, then you'll be able to break into the system. Now, the security has been increased in the over the years, and the simple way to make your system quantum proof
is to is to the tech. You's forgive me, but I'm going to put this into simple terms, is to increase the length of the private key. So if your password become longer and longer and longer. Then you need, you know, quantum squared next to break the system. Now, you know, how quickly do we get quantum? You know, some people say it's imminent, other people say it's years away,
some people it's theoretical. But the bottom line is about one quarter of our bitcoin wallets are not resistance to what to what is called the P two p K, which is basically the fret. So it's Atoshi's original coins. So no one's ever seen the move mind in two thousand and nine and ten, basically one and a half billion bitcoin or thereabouts in comparison to you know, approximately twenty million in Circnnection just under and you know they would be under threat, and some other coins which have
got all wallets. But you know Sailor and his results about Michael Saylor, the head of marketing for the Bitcoin as I always say, and the cena of micro strategy strategy, and he basically is now coming full on board with this. Yeah, there's been a couple of upgrades to the bitcoin protocol over the years. There was the tap route and there was a Sedgewick, and these were things that the core developers, you know, judged by the miners, can be implemented to upgrade the network.
And what can I just go back? Sorry when you say Michael Sailure is now fully on board with this, what do you mean with changing the security around bitcoints?
Would he announce his results last night that he's going to lead a leader charged to do this. And basically, you know, if you've got an uppower and wait in the system, and you convince the month to make the upgrade, and the upgrade will happen. It's happened twice before, and so I'm not worried about that. And I think to put it into economic terms, when the price was one hundred and twenty thousand, no one cared about content. They
went quantum Schmont. But now the price is crash, Everyone's like, oh dear, we better deal with concept. So they brought it to a head. You know, a crisis is an opportunity and all that, and so the price has come down. Now quantum is front of the agenda. The upgrades to the system will happen in the coming months, possibly a year or two, but it will happen ahead of any
constant threat. So I personally think that the Bitcoin network is not at risk of content because they'll do the right thing in the end, because they always have done in the pucks.
So back for four year cycle.
Okay, A four year cycles quite fun because the thesis is that now you mind bitcoin, and there's a harvey every four years, and there's a big run in the two years ahead of or eighteen months two years ahead into inter harbing and then and then there's room and then everyone gets bored and there's a collapse in the in the sort of mid terms as it were. And you know, at Bikery, we've got this wonderful guy called
Robin Griftiths. He's in his ages now and he's been talking about the four year cycle since I could remember. And I started listening to him in nineteenninety eight, and he was talking about it about twenty years before that, and it was the UF presidential election cycle. Okay, so that's let's let's do some four years. This will shock you, Okay, We'll started nineteen seventy four. There was a savage savage bear market in nineteen seventy eight. Your pick one's on
an invention at this point. Gold probably nineteen eighty two was famously the best year in history to buy the stock market and probably the bond market is well. Actually a huge times followed that. Eighty six comes next, Now eighty six something didn't happen, which was the top. It dragged on for another year and then we got a little mighty crash. Cycle breaks and you don't get your your dip then then then there's a little theory there.
So nineteen ninety that was a bit nasty, going into the hydra trade era ninety four was the fed rapes crashed ninety eight, the agent Russian default crisis. Two thousand and two was the nasty old dot com leg Yeah, are you getting interested yet?
Always interested?
Always interested?
Love as two thousand and six having happened, isn't it? And we had to wait two years and then we had a mega mega monster crash in two thousand and eight as a result of if.
You have to if you have to wait two years, it doesn't count, not a four year cycle. If you keep having to wait.
A year and two years the cycle quick.
Four year cycle was every four years.
Yeah, but if you fiddle around religious states and things, then maybe you can drag these things out a bit longer than they should do. So perhaps you fight the cycle for a bit, but then you stretch the band too far. So we've got to two thousand and six extended to wait twenty ten wasn't great, but we had the greed crisis as well. Okay, and now we go into the bitcoin cycle. So twenty fourteen you couldn't see it in the in the in the market so much.
Fourteen was was not memorable. Bitcoin was down a lot in twenty fourteen.
And just bitcoin was launched in noise. It was not or nane because it was straight after the financial crisis, wasn't it that it kind.
Of was born first they called Crist twenty ten and people that people have heard of it in the general public had heard of it in twenty and thirty are to Mount Cox. So we now in twenty eighteen, that was another stink of a Bitcoin down eighty two percent. Then were in twenty twenty two fit coins down seventy four percent. It was also a tech bear market in twenty twenty three, and a bond bear market. Now we're in twenty twenty six. So there's your four year cycle.
And I'll say it's not bitcoin cycle, it's the you know, it's the world cycle. And Bitcoin is the expression of that cycle, because it's you know, as many people say, it's an expression of liquidity. And so the asset that gets hit the most is the one that's in the firing light.
So should we expect it to be a bit of a canary in the cold mine? And obviously we've seen a lot of volatility in gold and silver, and also a lot on the software stocks and big tech, but that hasn't really turned up in the entities yet because there's been in quite a rotation into other stuff. Should we expect worse to happen?
Absolutely, one hundred percent. I mean we were all over. We're in the biggest bubble in indexation in the history of the world, and you know, the two thirds of America and within the American index, you know, all this tech and stuff. So I think you're cuts has brought that point out many times, and it's just it's a bleeding obvious, isn't it. And but everyone continues for for for bury it's reasons career risk, regulatory so on, to to hug the indices and and those mega mega Bega
stocks are our ironoscope of value. But let's go back a few months. You know, we saw the Spotify's and the netflixes and those sorts of things correct, all those sort of internet leadia services. Uh, and now we've got the software, but the but the big tech hasn't really dived yet. It's always last to go. The figures is last week. So you know, I do think that we found this extraordinary top but it but that does we shouldn't gay from the top stock market at all, because
what we've been deserving. We run these sort of the mentor models every week and we do a piece on Monday's called Global Trends by Creep Global Trends and Tree to Read, And basically we've been observing this enormous rotation and the main one is out of the US into the rest of the world. So the US we've done a because of stablished s, and t rest of the world has been very strong. And then take that a
stage further. We had big breakouts in consumer stakeboards, you know, the boring stocks, the toothpaste and the watching up liquid as opposed to the exciting space exploration. So we're having that rotation now and so there's only a stuff that can go up in the world when big tech stocks are going down. And of course, the indices won't be very happy with the biggest stocks going down, but there's loads of global midst walk cap in faraway places. You know.
Everyone's an expert in AI and computers and check and things.
I know. It's amazing, isn't it how quickly that happened. They're wrong with nothing about it, being an absolute expert in artists.
They're all going to be in Southeast Asia and Latin America and Central Europe before you know.
Oh, I mean, I'm an expert and all that stuff already, Charlie.
You're an expert. We all know.
This was from the last second. We haven't updated.
We're apts but slightly out of date from last time round. We're also experts on commodity super cycles, aren't we, John, So that might come in hand.
Oh yeah, oh yeah.
But Charlie, listen, the key question really is this. Has there been any change to the long term case for bitcoin? You know, so everyone thought that with President Trump's second presidency that there would be an extraordinary environment for cryptocurrencies in general, there'd be a regulatory environment that would mean they would kind of go to the moon. That hasn't quite happened, and there's also maybe competition to bitcoin in the form of the various different types of stable coin,
and so there has been changed, There are shifts. Has anything, to your mind changed for the long term case for holding bitcoin.
No, it's the Internet. So the Internet stocks are going down. Bitcoin's caught up in that is the Internet shrinking.
I don't understand why bitcoin represents the Internet. I know it represents software. I know it's an expression of liquidity, but anything else could be an expression of liquidity as well.
On a different day, we've got booming stable coin industry, you know, we've got booming computers. AI is going to headgehunds will probably end up being run by AI. And there they're not going to fill around with a you know, a good old fashion pack account doing transaxles. They're going, yes, straight to crypto.
And why would they just use table coins though.
Well they will, but it's all part of the same ecosystem, you know, they're all connected. And I think that that bitcoin. I mean, let's look at the price of pitcoin. Okay, it's just crashed down to sixty pound dollars. I think it's already sixty five.
No, No, it's back back up to sixty six. Don't worry, We've got proper volatility going here on here, yes, right, five and a half percent to sixty six two hundred and sixty seven dollars and twenty nine cents. Okay, So that's a hell of a move from sixty thousand.
Where it was every night, right, So I was referring to the mid of the night, and it's already covered quite a lot from that. We can express it in various different waves, and I think the important point is that the levels that it's at now are the same levels of the peak of a large cycle. So in twenty twenty one, we were flirting in the mid mid sixties, and here we are in the mid sixties. Now. The previous cycle, you know, we saw exactly the same behavior.
You know that the price peeds at nineteen thousand in the end of two thousand and seven, and then in the twenty two point cycle in that bear market, it goes down to fifteen sixteen. It was below. So you know, straightforward technical analysis one oh one, where you know you're all high is the next low and that sort of thing. And you know, I don't forgive me. I don't really
run my vestment strategy on these theories. But with what we have for a major point resistance, we you know, Tube level pointy two twenty one, which was probably the most hype cycle ever. The thick point those levels are pretty solid, and you know, a lot of perhaps were launched, and we had you know, futures were well established by then and and all these things.
Okay, So so I mean because obviously the other question here is I am infamous no coiner, but I would quite late to catch it on the next say, we'll see, I'm not having fun staying poor. So you know, you're basically saying that a roundabout here is a good time to buy if you want to get.
Oh no, no, no, this can't happen. John buying his first bitcoin would literally mean that the whole world would implode.
Just it's the end of crypto. When I praised that by you.
Don't encourage him to do this, Charlie.
John's you're ready goal. Yes, okay, so let's do a bit of bitcoin gold, should we?
Yeah?
Yeah, even said like that idea, and that's what said things about bitcoin and gold danger alert alert.
In three seventeen. You know, very briefly, one bitcoin, we'll buy you fifteen ounces of gold that crashed down to about three and twenty nineteen, and then in the twenty one bear market, a bull market at biggettarbon, he got you thirty five ounces, so bitcoin twenty five ounces, that crashed down to about ten nine or ten. And then earlier this year you could have nearly got forty outs. You've got thirty nine outs that've got and we've now
crashed down to about fourteen yep. So you know, gold is gold has had a bit of a wabble weecs lee silver and massive crash out of really strong, super strong up trends massively over or massively eyped, so they've crashed from eyes. Bitcoin was already a downtrend. It's been in the down trends is October since the announce deck beach and the text dots, so it came down and
that's crashed from a down trip. So you basically got I think in the financial speak, you know, one of them's ten thousand sigma something overbought and the other's one million sigma deviations over sold. So he's basically got once for a hot marketing, which is gold, and you've got one ice cold market, which is bitcoin. And so you
know which are you by your deck? And if you think bitcoin's going to zero because it's a Ponzi scheme and you you know, but the seventeen year old Ponzi scheme, but like five thousand old.
Hey, they can always last longer than you think possible.
Yeah, it's the only ponsy skiing with huge transparency and the public, the open blockchain and the free market and all that.
To be fair, I don't think it's some points scheme. I think that is is just a lazy dismissal palsy on the head.
I mean no, there will be no Ponzi on the ahead of this. It will say Charlie Morris says, buy bitcoin now if you don't want to have fun staying poor, right John, Yeah.
Yeah, so I'm not really a little bit longer you think I am. It's my night job. It's not my day job. You know, you know, a big kind golga. Yes, so excuse the flood. But you know, bold gold, gold risk weighted and all that. And we listened in London three months ago, took a bold, take a bold in Germany, tick a bold in France, in the Netherlands, in Sweden and Italy, or Monday.
And congratulations Charlie.
And you know it's two thirds gold, one for bitcoin and basically trying to get the best out of both because the combination of the two assets is truly magical. You know, they work against each other, are consistent, low correlation, and it's a very powerful thing to own. And if you risk weigh bitcoin and gold and to those to those bivolatility, basically you've got the cleanest expression of the global money supply growth out there. So when people say, oh,
bitcoin's the monetary hedge, No, gold's the monetary hedge. Actually one's will risk off traditionally gold. See it's looked pretty riskne recently. But let's face it, it's driven by central banks more than anything else. And obviously speculators joined the party in the last year, as John Reeve was saying your last podcast, But but the central banks are the
under underpinning all of this. Then the central banks don't buy silver and they don't buy bitcoin, so you know, you know, they they don't get the narratives of the same. So people say, oh, yeah, end of the world dollar crisis BEFO the basement of this sort of thing. And then and then actually it's not applicable to any of them. You know, they're all going up down for their own reasons, and and and and and you know, silver's crash from a bubble and bitcoins crash from a period of weakness
related to tech. Very different. But you put them together and you just get this calm expression of the global money supply. So it comes back to liquidity. You know, the more money there is in the world, the more money is they're in market, then then these things go up long term and big. When it's seventy five if you take a takeout stable coins, it's seventy five percent of printer. You know, it's this one. This one got
the whole asset class. Next is a pilium, and then and then there's to It's all pretty small, and of course they're own.
So maybe maybe to keep the global financial structures safe, which you'd be encouraging John to buy a bit of Bold as opposed to actually go out and buy his own bitcoin.
Well, of course John should buy Bold. He should switch this goal to bold, because if he's got gold, that's massively more warms of standard deviations over bought. Then diversifying, you can't diverse by gold with stilver. So how do you have an alternative asset? Of course you can, you can, you can add add to your silver sets into you five hundred. But we're talking about alternative assets here. Yeah, we're talking about off grid, globally neutral, no cash flow
assets which are far more interesting. And what's your choice. Something that's going to give you maintain high liquidity and low correlation. That's bitcoin, So bold is what you should do, John, Yeah, there.
Go, John, Okay, So there we go. So Charlie find me that keithing we're pulling out of this? Isn't that your opinion? It's absolutely fine to hold onto your bitcoin bitcoin for the long term. Nothing significant has changed. Whatever. Whatever one thought about bitcoin previously, one can continue to think now. But if you want to hold it in a less volatile form, maybe mix it up with gold.
A bit well, that would be what that would be multi Yeah, I know.
I'm repeating your take back to you just for confirmation purposes, because everyone everyone will probably still know roughly why I stand on this matters. And John over there, who doesn't hold any bitcoins us for the record, of course I do. John, Well, I tell you what John in our next podcast next week,
we will find out what you have done. So if any listeners have any recommend recommendations for John go out and buy a bitcoin and destroy the global financial structure, or buy a nice ETF that mixes them up, or just hang on to your gold. What does everyone think John should do? Please email us about that on Merrimney at Bloomberg dot net. Charlie, thank you so much for joining us today, John, thank you too. Thanks for listening
to this week's Myrin Talks Money. If you like us, share, rate, review, and subscribe Wherever you listen to podcasts. Keep sending questions or comment and advice for John, of course to Merron Money at Bloomberg dot net. You can also follow me and John on Twitter or ex I'm Marinus w John is John Underscore, Stepek and Charlie. You are at Atlas Pulse right.
Yeah on Twitter or by Tree dot com. Be White on.
Twitter or by Tree dot com. This episode was hosted by Me Maren sumset Web with John Steppeck. It was produced by Someersadi and Moses, and special thanks to Charlie Morris for joining us on this emergency Marron Talks Money podcast